Refinancing your student loans can be an excellent way to save money and get more control over your student loan repayment plan. Depending on the situation, you could save hundreds or even thousands of dollars on interest and cut your time in debt significantly.
That’s why it’s critical that you choose the best student loan refinance lender for you. To help you make that decision, NerdWallet’s 2021 Best-Of Awards recognized PenFed Powered by Purefy as a Best Student Loan Refinancing Overall winner.
Here’s why PenFed Powered by Purefy was picked and how to compare their features with the other top student loan refinance companies out there.
What makes PenFed Powered by Purefy stand out
The student loan crisis has exploded in the last decade, creating a market for student loan refinance lenders to help college graduates and their parents pay off their debts faster and more effectively.
PenFed Credit Union is one of many such lenders, but it’s been ranked ahead of the rest for many reasons:
- Fast payoff options: Once you’ve refinanced your student loans, you may be looking for ways to pay off your debt more quickly. PenFed offers two important features that can help with that: biweekly and additional payments via autopay. In fact, that’s why the credit union also won NerdWallet’s award for Best Student Loan Refinancing for Fast Payoff. Both of these options make it easier to pay down your debt faster and help you save more interest along the way.
- Low interest rates: PenFed has some of the lowest fixed interest rates you can get with student loan refinancing. That includes the high end, where some lenders get into the double digits. If your goal is to save as much money as possible, PenFed can get you there.
- Spouse loans: If you’re married, refinancing two separate times can be inefficient. Purefy’s spouse loan refinancing option is unique in that it makes it possible for couples to combine their loans into just one loan between the two of them. This can especially be beneficial if one spouse has a higher income or higher credit score.
- Cosigner release: PenFed isn’t the only student loan refinance lender that offers the chance to release a cosigner from their obligations, but it won’t take you long to be eligible. Where some lenders may require 24, 36 or even 48 consecutive on-time payments before you can apply, PenFed lets you file a request after 12.
- Parent PLUS Loan refinancing: Parents can refinance their Parent PLUS Loans with any student loan refinance lender, but if they want to refinance the debt in their child’s name upon graduation, only a handful of lenders offer this feature. That includes PenFed. Of course, both parties must agree to the refinance, but it could be a great way to allow a parent to focus on retirement and other important financial goals.
How to refinance student loans
The process of refinancing student loans involves combining one or more existing student loans into one new one with a private lender. Fortunately, it’s a relatively simple process, too. Start by taking some time to shop around and compare rates from the best student loan refinance lenders.
That’s right, even with an award for being the best, PenFed might not be the right fit for everyone. So it’s crucial that you take the time to research several options.
The top student loan refinance companies allow you to get prequalified before you submit your application. This arrangement is beneficial because it allows you to review and compare loan offers based on just a soft credit check, which doesn’t impact your credit score. Use the Purefy Compare Rates tool to get prequalified with multiple lenders at once.
During this process, it’s important to consider more than just the interest rate. The top student loan refinance lenders also offer other features, such as the ones discussed above from PenFed.
You’ll also want to make sure you’re comparing apples to apples. With many lenders, the lowest interest rate they offer is a variable rate, which can fluctuate over time with the market. And because we’ve seen record-low interest rates recently, the likelihood of rates increasing over time is high.
So be sure to compare fixed rates to fixed rates, so you can make a better decision for your situation.
Once you’ve considered all the factors that are important to you, select a lender and apply through their website. If you’re approved, and you accept the terms of the loan, the lender will pay off your existing loans directly.
Is refinancing with PenFed right for you?
Student loan refinancing isn’t right for everyone. As such, it’s crucial that you take the time to consider all of your options.
While the process can give you the opportunity to score a lower interest rate and get some more flexibility with your repayment term, it will also cause you to lose federal student loan benefits (if you have federal loans).
That includes access to student loan forgiveness programs, certain student loan repayment assistance programs and income-driven repayment plans. The Department of Education also typically offers better forbearance and deferment options than private lenders.
If you anticipate needing any of these perks, it may be better for you to stick with your current loans. If not, though, refinancing may be right for you.
As for whether or not to refinance with PenFed or another lender, take your time to compare what PenFed offers with what you can get with other lenders. That includes interest rates, repayment terms, loan options and more.
This process can take time, especially if you need to work on your credit before you apply. But refinancing with the right lender can make a big difference in your repayment plan, potentially saving you both time and money.